All You Need To Know About Bitcoin Mining

What’s Bitcoin mining?

Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the blockchain, and also the means through which new bitcoin are released. Anyone with access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. The rewards, which incentivise mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin. This makes the business highly competitive. However, bitcoin mining is different from bitcoin trading.

Where do Miners make their money from?

As a result of their work, miners get their rewards or compensations through the transaction fees that are being over every Bitcoin transacted between a buyer and a seller of Bitcoin

Why do people Mine Bitcoin?

By mining, you can earn cryptocurrency without having to put down money for it. That said, you certainly don’t have to be a miner to own crypto. You can also buy crypto using fiat currency (USD, EUR, JPY, etc); you can trade it on an exchange such as Ngexchanger or Remitano.

In addition to lining the pockets of miners, mining serves a second and vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically “minting” currency.

In the absence of miners, Bitcoin would still exist and be usable, but there would never be any additional Bitcoin. There will come a time when Bitcoin mining ends; per the Bitcoin Protocol, the number of Bitcoin will be capped at 21 million.

What Happens to Bitcoin After All 21 Million are Mined?

Bitcoin is like gold in many ways. Like gold, Bitcoin cannot simply be created arbitrarily. In fact, there are only 21 million Bitcoins that can be mined in total. Once miners have unlocked this many Bitcoins, the planet’s supply will essentially be tapped out.

It may seem that the group of individuals most directly affected by the limit of the Bitcoin supply will be the Bitcoin miners themselves. On one hand, there are detractors of the Bitcoin limitation who that say that miners will be forced away from the block rewards they receive for their work once the Bitcoin supply has reached 21 million in circulation. In this case, these miners may need to rely on transaction fees in order to maintain operations. There’s an argument that miners will then find the process unaffordable, leading to a reduction in the number of miners, a centralization process of the Bitcoin network, and numerous negative effects on the Bitcoin system.

This argument assumes that transaction fees alone will be insufficient to keep Bitcoin miners financially solvent once the mining process has been completed. On the other hand, there are reasons to believe that transaction fees and mining costs will even out in the future. Looking ahead by several decades, it is not difficult to imagine that mining chips will become small and highly efficient. This would reduce the burden placed on miners and would allow mining to become an activity with a lower threshold of initial cost.

How much can a miner gain from bitcoin mining?

Bitcoin are mined in units called “blocks.” As at a time, the reward for completing a block is 12.5 Bitcoin. At today’s price of about $5000 per Bitcoin, this means you’d earn (12.5 x 5000)=$62,500.

When Bitcoin was first mined in 2009, mining one block would earn you 50 BTC. In 2012, this was halved to 25 BTC. in 2016, this was halved to the current level of 12.5 BTC. In 2020 or so, the reward size will be halved again to 6.25 BTC.

If you want to keep track of precisely when these halvings will occur, you can consult the Bitcoin Clock, which updates this information in real time.

How many blocks have been mined so far?

Information about how many blocks have been mined so far is on every info site concerning Bitcoin. A number of sites, including bitcoinblockhalf.com and blockchain.info will give you that information in real time.

Why do Miners help in Confirmation of Transactions?

Miners are getting paid for their work as auditors. They are doing the work of verifying previous Bitcoin transactions. This convention is meant to keep Bitcoin users honest. By verifying transactions, miners are helping to prevent the “double-spending problem.”

Double spending means, as the name suggests, that a Bitcoin user is illicitly spending the same money twice. With physical currency, this isn’t an issue: Once you hand someone a $20 bill to buy a bottle of vodka, you no longer have it, so there’s no danger you could use that same $20 to buy a wine next door. With digital currency, however, there is a risk that the holder could make a copy of the digital token and send it to a merchant or another party while retaining the original.

What a Bitcoin miner does is that they check transactions to make sure that users have not illegitimately tried to spend the same Bitcoin twice.

Can a miner verify transactions without earning?

That is correct.

In order to earn Bitcoin, you need to meet two conditions. One is a matter of effort, one is a matter of luck.

1) You have to verify 1MB worth of transactions. This is the easy part.

2) You have to be the first miner to arrive at the right answer to a numeric problem. This process is also known as a proof of work.

What I mean by right answer is that to be the first miner to come up with a 64-digit hexadecimal number (a “hash”) that is less than or equal to the target hash. It’s basically guess work. And because it’s guesswork, you need a lot of computing power in order to get there first. To mine successfully, you need to have a high “hash rate,” which is measured in terms of megahashes per second (MH/s), gigahashes per second (GH/s), and terahashes per second (TH/s).

What are the mining equipments?

Either a GPU (graphics processing unit) miner or an application-specific integrated circuit (ASIC) miner. These can run from $500 to the tens of thousands. Some miners–particularly Ethereum miners–buy individual graphics cards as a low-cost way to cobble together mining operations.

How do I increase my chances of guessing the target hash faster than anyone else?

You’d have to get a fast mining rig or, more realistically, join a mining pool–a group of miners who combine their computing power and split the mined bitcoin. Mining pools are comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners.